CME and MexDer connect for US/Mexican derivatives trading

The Mexican Derivatives Exchange, a subsidiary of incumbent national exchange, the Bolsa Mexicana de Valores Group, has announced a partnership with the CME Group, a US derivatives market, to enable domestic investors to trade contracts listed on the other exchange.

The Mexican Derivatives Exchange, a subsidiary of incumbent national exchange, the Bolsa Mexicana de Valores Group, has announced a partnership with the CME Group, a US derivatives market, to enable domestic investors to trade contracts listed on the other exchange.

Using a connection between the two firms' trading systems, MexDer members will have access to the CME Group's benchmark derivatives contracts, which include those based on interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities.

The second phase of the partnership, which is schedule for completion in Q3 2011, will enable CME Group members to trade MexDer's benchmark interest rate and equity index derivatives.

As part of the deal, CME Group has established an international telecommunications hub in Mexico City, allowing MexDer participants to use their existing front-end trading platform or application programming interface to route and execute on the CME's Globex electronic trading platform.

“The direct, seamless order routing connection will make it possible to trade and route electronic orders on MexDer and CME Group, opening both their contracts to a broader range of traders,” said Luis Téllez, chairman and CEO of BMV Group. “Our partnership with CME Group will strengthen CME Group's ties to the fast-growing Mexican market, and give Mexican market users access to the CME Group's suite of derivatives products.”

The partnership is CME Group's second in the region following a memorandum of understanding signed with Brazilian exchange group BM&F Bovespa in February 2010. Under the agreement, CME Group will supply a new trading infrastructure for BM&F Bovespa.

The two exchanges signed a memorandum of understanding, which included an agreement that BM&F Bovespa would increase its stake in the CME and that the firms would look for ways to develop clearing services for over-the-counter derivatives.